Core Viewpoint - The August non-farm payroll report from the U.S. indicates a weakening labor market, with employment, hours worked, and income growth returning to pandemic levels [1] Group 1: Federal Reserve Actions - The Federal Reserve is almost certain to cut interest rates at the September meeting, with a 25 basis point cut highly likely [1] - If August inflation is weaker than expected, there is a greater chance of a 50 basis point cut [1] - The Fed's previous inflation forecasts have been proven overly pessimistic, while their labor market outlook has been overly optimistic [1] Group 2: Economic Projections - The Fed is expected to initiate a prolonged easing cycle, aiming to reduce rates to what it considers a "neutral level" of around 3% by March 2026 [1] - The new Fed chair is likely to further enhance stimulus measures, potentially lowering rates close to 2% [1] - There is a risk that if inflation rises again, some of the stimulus measures may be reversed by 2027 [1]

Core Viewpoint - The Federal Reserve should adjust interest rates closer to neutral levels and not wait for labor market deterioration to take action [1] Group 1 - Federal Reserve Governor Waller emphasizes the need for proactive interest rate adjustments [1] - The statement suggests a shift in monetary policy approach to prevent potential economic downturns [1]